- 5 - The definition of gross income in the income tax law is inclusive on its face, and the concept of inclusiveness is long established. See Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-430 (1955). As to distributions of capital gain dividends (defined in section 852(b)(3)(C)), by regulated investment companies or mutual funds, section 852(b)(3)(B) states: “A capital gain dividend shall be treated by the shareholders as a gain from the sale or exchange of a capital asset held for more than 1 year.” Section 1222(3) states that the term “long-term capital gain” means “gain from the sale or exchange of a capital asset held for more than 1 year”. Net long-term capital gains are subject to tax at the preferential rates set forth in section 1(h). Consistent with this statutory mandate, Form 1040 (1997) U.S. Individual Income Tax Return, Schedule B, Interest and Dividend Income, and Schedule D, Capital Gains and Losses, together ensure that capital gain distributions are taxed. In addition to instructing the taxpayer to “Include gross dividends and/or other distributions on stock here”, line 5 of Schedule B also states: “Any capital gain distributions and nontaxable distributions will be deducted on lines 7 and 8”. The tax form clearly provides that all capital gain distributions (as well as nontaxable distributions) must be listed on line 5, and there is no reasonable argument that distributions on shares of mutualPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011